Last year, the Herald reported that 14 private businesses rent space in buildings owned by the city of Grand Forks. All told, it amounts to more than 1 million square feet, spread throughout six buildings. At the time, gross revenue from those rentals totaled nearly $2.3 million, with the net income going into the city’s growth fund.
But as all landlords know, the rental business isn’t easy. The dollars generated come with hard work, headaches and difficult decisions.
The city is no exception. Last week, the Herald reported that two downtown businesses want to modify the leases they hold with the city; one wants to extend and the other wants out early. Both have had troubles keeping up with rent payments.
Kittsona is extending its lease through the end of the year after its past lease ended July 1. The boutique will pay $2,000 of its $4,900 rent, with the remainder deferred at 0% interest. As of this month, Kittsona owes approximately $92,000 in back payments to the city.
During a meeting last week, Meredith Richards, the city’s community development coordinator, said the city is “kicking the can down the road” as it hopes to recover that debt, although Kittsona insists it will pay.
Also last week, another boutique, Ann Love, asked to terminate its lease. It owes $42,000 in back rent and has a lease that runs through 2022, with an opt-out clause at the end of this year. The city’s Growth Fund Committee delayed taking action on the request.
Ann Love is expecting to close due to a slowdown in business, its owner told the committee, and proposes that nearly $40,000 in improvements made to the space be allowed to cancel the money owed.
City Attorney Dan Gaustad summed up what most are probably thinking when he said, “it begs the question: Who’s next?”
That’s the biggest problem with the city’s commitment to being a landlord; since all decisions are publicized, any accommodations become precedent. And then, as Gaustad asks, who’s next?
Should the city be in a position where it may someday appear to be strong-arming or otherwise embarrassing tenants to collect debts? Should the city be in direct competition with the community’s private landlords, or any private business?
Answers: No, and no.
Three steps seem in order.
First, the city should find an amicable solution to the problems presented by the tenants at the downtown building called Corporate Center II. Ann Love and Kittsona both have space there. Follow the advice President Lincoln gave Gen. U.S Grant near the conclusion of the Civil War: “Let ’em up easy.”
Dedicate future city/private efforts on smaller, yet meaningful, projects that have a specific focus and goals that nod toward community improvement -- such as the downtown Technology Hub project. (It should be noted that the Herald rents property from the city at the site of the proposed project.)
And then, knowing full well that precedent has been set and will become the norm with all tenants in the future, trim the number of city-owned rental properties and ease out of the landlord business.